China’s economy grew 5% last year driven by surging manufacturing, according to official data. The fourth quarter saw a remarkable rebound, with growth of 5.4%, after slower growth in the third quarter. However, economists warn that this comes at a cost, citing entrenched deflation and weak consumer sentiment.
The US tariffs imposed on Chinese goods have likely led companies to front-load exports, resulting in a surge in manufacturing production. This boost is expected to be short-lived as import restrictions begin to take effect. Analysts expect Beijing to set its official growth target for 2025 at around 5%, but trade challenges are looming due to incoming US President Donald Trump’s threats of higher tariffs.
Retail sales and industrial output both showed growth, albeit modest, with retail sales increasing by 3.5% and industrial output rising 5.8%. However, residential property prices slid in many major cities, while new home prices rose in Shanghai.
China’s population declined for the third consecutive year, with a slight increase in births unable to offset the rise in deaths. The economy “masks some underlying vulnerabilities,” said Frederic Neumann, chief Asia economist at HSBC.
Analysts are divided on the implications of China’s growth data, with some warning that the headline figure “masks” underlying weaknesses and that more stimulus is needed to support consumer spending power. The Chinese government’s ostensible attainment of its growth target may further erode credibility in official data.
Source: https://www.ft.com/content/f9bc8333-1f88-4a70-addf-ba8ae5f587e5